Netflix gains boost tech stocks; Apple slips

Online movie firm leaps as Disney deal adds to streaming offering

SAN FRANCISCO (MarketWatch) — Tech stocks managed to close with mostly gains on Tuesday, with online movie firm Netflix surging more than 14% on news of a new content deal with Walt Disney Co.

Reuters

Netflix shares jumped 14% on Tuesday following a content deal with Disney.

Netflix
NFLX, -1.39%
and Pandora Media Inc.
P, -1.10%
both saw strong gains by the closing bell — though Pandora tumbled in after-hours trading as its forecast for the fourth fiscal quarter came in below Wall Street’s estimates.

Netflix Inc. closed up 14% to $86.65 after the online-video streaming company announced a new content deal with Disney.
DIS, -1.16%
Under terms of the deal, starting in 2016, Netflix will be the exclusive U.S. pay-TV service for first-run live action and animated films from Disney studios. Beginning that year, Netflix subscribers will be able to watch movies from all of Disney’s major studios as soon as the movies are made available for release on pay TV. Read: Netflix shares spike on news of Disney pact

Apple Inc.
AAPL, -1.54%
the Nasdaq’s largest component, shed almost 1.8%, to slip below $576 a share. The Nasdaq Composite Index
COMP, -0.94%
fell 0.2% to 2,997 by the close.

UBS analyst Steven Milunovich issued an early note to clients, maintaining a bullish rating on Apple, but said “significant P/E expansion” is unlikely for the shares, which are currently trading about 11.2 times the company’s estimated earnings for the next four quarters — more than 60% below its average multiple for the last 10 years, according to data from FactSet.

“The experience of Google and Microsoft suggests that P/E expansion largely is over once margins peak and earnings growth moderates,” the analyst wrote. “Even bursts of faster revenue growth don’t tend to boost the multiple.” Read: Apple's upside may hinge on new products

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Synacor Inc.
SYNC, -2.58%
said it reached a partnership with Zynga to allow providers of pay-and-satellite TV the ability to offer social games to customers. Synacor, which is partly owned by Intel Corp.
INTC, -0.60%
is a developer of authentication and management services to providers of on-demand content.

Qualcomm Inc.
QCOM, +0.67%
shares were up by 10 cents to $63.47. The communications chip and technology developer said it would invest $120 million in Japanese electronic giant Sharp.

Notable losses also came from Internet company IAC/Interactive Corp.
IACI, +0.70%
which fell almost 8%, to $43.50 a share, and Demand Media Inc.
DMD, -2.72%
also off by nearly 8%, at $8.50 a share.

Before the market opened, Goldman Sachs analyst Heath Terry cut his ratings on both IAC and Demand Media to sell from neutral. In the case of IAC, Terry cited more competition from the likes of Google Inc.
GOOG, -0.73%
among his reasons for downgrading both stocks.

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